Columns/Blogs Legal Outplacement
Challenges to arguing a failure to mitigate

When an employee is dismissed and consequently brings a wrongful dismissal claim, the employer may want to claim the employee failed to mitigate their damages. However, it can be quite difficult for employers to successfully make this argument.

Wall v M.H. Rowe Sheet Metal Fabricating Inc. (no citation yet; “Rowe Sheet Metal”) is a case that demonstrates the difficulties an employer may face when trying to assert that an employee has failed to mitigate their damages – particularly where an employee has worked their entire career with the employer.

What is mitigation?

In wrongful dismissal cases, the dismissed employee has an obligation to minimize their losses after being terminated. Usually, this means an employee is expected to make reasonable efforts to find new work that is comparable to the job they held with their former employer.

Despite it being the employee who has the obligation to mitigate, it is the employer who has the onus to establish that an employee has failed to make reasonable mitigation efforts by demonstrating two things: first, that the employee failed to make reasonable efforts in conducting a job search, and second, that the employee would have secured comparable employment if reasonable efforts had been made.

Demonstrating these things can be difficult, as shown in Rowe Sheet Metal.

Background

At the time of her dismissal in October 2020, a 56-year-old office administrator had worked for the employer for 35 years. In fact, she had only ever worked for that one employer.

The employee had no formal training or certification for the bookkeeping and payroll duties she performed for the employer. She had limited computer skills, and her education was in an unrelated field.

The employee only began searching for a new job four months after her dismissal.

The employer had sent the employee over 5,000 job postings. The employee had applied to a total of 59 jobs, but had not been granted any interviews, nor had she received any job offers.

The employer argued the employee had failed to make reasonable mitigation efforts because of the delay in starting the job search and by only applying to 59 jobs. Further, the employee had refused outplacement services and career counselling.

The Court’s decision

In this case, the Court determined the employer had not met its onus in establishing a failure to mitigate.

The Court accepted that the four-month delay in beginning a job search was due to the employee’s lack of access to an electronic device and that her job search began shortly after she was able to secure such a device. The Court also accepted that the employee’s reluctance to do a physical job search was reasonable due to the pandemic and the level of restrictions in place at the time.

The Court further noted that an employee is permitted a few months grace period after termination before having to start a job search.

With respect to the number of jobs the employee had applied to, the Court stated the employee’s reasons for not applying to the many job listings sent to her were reasonable. For example, many of the jobs had certification, education, or experience requirements the employee did not meet.

The Court highlighted that the employee had only ever worked for the one employer, and her skills and experience had been tailored to the needs of that employer, which made her less marketable.

Finally, the Court stated that an employee does not fail to mitigate if they do not use outplacement services. Further, the Court noted the employer had offered a specific amount of money for career counselling, but the employee had not been able to find such services at that price point.

Given all of the above, the Court found that the defendant had not met its onus to demonstrate a failure to mitigate.

Lessons for employers

This case highlights the difficulty employers may face when trying to show that an employee failed to mitigate – particularly for long-term employees whose experience has been tailored to the employer.

An employee’s job search does not need to be perfect, only reasonable. Further, it is not enough to show that the job search efforts were unreasonable, but an employer must also show that the employee would have secured comparable employment if reasonable efforts had been made.

While this case demonstrates that an employee’s rejection of offered outplacement and career counselling services is not always sufficient to prove a failure to mitigate, it is still important for employers to make such offers as it can both help employees find new work faster, potentially reducing wrongful dismissal damages, and it may potentially assist employers in making a failure to mitigate argument.

John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.